Treatment of Depreciation
This query is : Resolved
29 November 2007
Hi,
Wanted to understand the provisions of companies act for depreciation:
If we have purchased any asset, and it is ready to use, but it is not put to use, whether the depreciation should be charged on the same?
For eg., our company has purchased a licenced software to be used in new product. The software cost will be depreciated in the due course.
The product in which it is to be used is under developement, and not yet ready. Hence, the software can also not be used till the time the product is ready.
In such a situation, what is the depreciation treatement for the software licence cost?
Regards,
Rajen
Wanted to understand the provisions of companies act for depreciation:
If we have purchased any asset, and it is ready to use, but it is not put to use, whether the depreciation should be charged on the same?
For eg., our company has purchased a licenced software to be used in new product. The software cost will be depreciated in the due course.
The product in which it is to be used is under developement, and not yet ready. Hence, the software can also not be used till the time the product is ready.
In such a situation, what is the depreciation treatement for the software licence cost?
Regards,
Rajen
29 November 2007
The software cost has to be depreciated in accordance with the companies act.The "put to use" clause is specified in the Income Tax Act and more so the realisable value of the software will always be less than its cost in the market with due course of time,so it needs to be depreciated.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Reopen of assessment proceeding
- TDS on Consultancy- Non DTAA
- Depreciation of fixed assets- coop housing society in mumbai
- Experts need help
- Eway bill generation from place other than registeted
- EPF FULL & FINAL RULES IN 2026
- Management System (IMS)
- COMMERCIAL INVOICE FOR MATERIAL AND FREIGHT
- Condonation . E-Verification of last year return .
- Query – TDS on purchase of land from NRI under Income-tax Act, 2025
- Goods sold but invoice not issued
- Tally: Imported bank entries do not show up in manual reconciliation
- Sales of goods of amount Rs97 lakhs to a party
- Confused About My Career After 12th — Cyber Security, AI or Finance? Need Guidance
- STATUTORY AUDIT OF A SMALL PRIVATE COMPANY INCORPORATED ON 28.03.2025
- Guidance Needed: Linking Multiple Form 26QB Payments and Responding to ITD Defaulter Notice
- How to pay remaining amount of TDS after due date?
- Resigning a auditor from the company for misconduct
- RCM @ 5% on Hamali charges, Transport Charges, Unloading charges we take ITC or not
- CALCULATION OF DEFFERED TAX - OP BL IS DTL & CURRET IT DTA
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani
Subscribe to Pro
Join an elite circle of professionals
CAclubindia
